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This is going to be catastrophic. Whether AI works or is useful or not isn’t even the question anymore. It can fulfil every promise Sam Altman has been making
by Gigachad 2mo ago
This is going to be catastrophic.
Whether AI works or is useful or not isn’t even the question anymore. It can fulfil every promise Sam Altman has been making and will still make no financial sense to justify these valuations.
- goolz 2mo agoI have already begun winding down my spend on claude and OAI to make room for infra budget. Anecdotal, but I have no doubt a lot of others are doing the same, I very much agree the US players have major issues looming. What an exciting time to be alive!
- netdevphoenix 2mo agoNot exciting for anyone directly or indirectly invested in a frontier lab or its partners. And that is a lot of people, including you.
- gruturo 2mo agoNo time like the present to pull out and reduce your exposure. I brought this up in my employer's forums 4 months ago and honestly it's been clear even before then. In particular, the upcoming IPOs of both oAI and Anthropic will likely be disastrous for the public - the floor is falling from under them and I don't know if they can be scrappy and work with fewer resources - their internal culture may not support this. We all knew in our hearts they're a commodity - just see how easily you can switch between the 2 of them - and now there are 10 more options costing a fraction. When Xi Jinping did the announcement of their open weights push, they might as well cancelled their IPOs....
- topato 2mo agoYes buuuut…. I do quite a bit of day trading (maybe closer to scalping) for the first few hours the market is open, everyday. Anecdotally: despite everyone knowing its valuation was ridiculous, I rode that SpaceX train pretty hard and made a pretty penny. I close-out all my positions by end-of-trading everyday… so when the day came when there was a very clear and very scary indicator during early trading hours, quickly followed by SpaceX’s catastrophic fall right after opening bell, that was the end of my involvement…. And I fully expect oAI and anthro to be the same way. They’re being propped up with private loans, subsidies, and other tricky bookkeeping techniques. You would think their CEOs would pivot away from their current public personas. Ironically, they are like a poor man’s Elon Musk… and that doesn’t bode well for their companies
- gruturo 2mo agoYes experienced investors will profit from it and leave the general public holding the bag, that's the plan I'm afraid.
- zozbot234 2mo agoThe frontier labs will do well if they pivot their offering towards more capable, larger-scale models that are inherently harder to both train and deploy for commodity suppliers. Their existing investments in gigawatt-scale datacenters are quite optimal for this. "Commodity" inference need not comprise the whole market.
- anon373839 2mo agoI don’t think this works, for a few reasons. First, intelligence gains from scaling the models bigger is sublinear now. So they could eke out a little extra performance, but the increased cost will eventually eclipse the economic value gained from this. Second, humongous models are impractical even for them to deploy widely. They’re best used as teachers for smaller, more efficient models that can crank out the volume they need to sell. Finally, there is a data wall. Sure, they can keep scaling RL on math problems and code. But with everything else, where will the supervision come from when they need several orders of magnitude more?
- alienbaby 2mo agoassuming the technology of model architectures does not gain any further breakthroughs that returns us back to the gains previously seen. I'm of the opinion that we still have some discoveries on the mathematical side of the fence to go that will improve models further.
- netdevphoenix 2mo ago> I'm of the opinion that we still have some discoveries on the mathematical side of the fence to go that will improve models further. That's assuming the infrastructure needed to develop models stays available financially and supply wise. A lot of the services used to train and develop models are supplied and funded by people who are looking for multiple returns of investment. If/when OpenAI and Anthropic valuations fall and they inevitably get acquired, will Meta/Alphabet/Microsoft still want to spend lots of money for unclear returns in the short-term? Nvidia and co are on a one way train service to hype town. I don't think they will be happy to get on a coach to hype town Temu version. The shareholders likely won't. Also, the backlash against LLMs is growing rapidly. AI content, data centres, etc is quickly gaining negative connotations outside of visual and music artists circles. While existing models are going nowhere, developing more advanced models is very quickly getting unpopular. LLMs Data centres increasing people's bills, Anthropic destroying old books, chat bots giving unethical advice to vulnerable people, etc. It won't be long before LLM infrastructure becoming an electoral issue. Will a small research oriented community be big enough justify maintaining the apparatus needed to produce infra tech at a profitable level post OpenAI?
- goolz 2mo agoSometimes fear can be quite exciting.
- csomar 2mo agoThe car industry is also a trillion $$ market in the US. I don't see why that would go any differently from the Chinese cars ban.
- noman-land 2mo agoYou're comparing an entire industry to a single company.
- iinnPP 2mo agoYou wouldn't download a car, would you?
- csomar 2mo agoMost of the money will come from companies/corporations who will be required to buy safe AI. The public will be just banned from buying which might make it hard (ie: site/payment blocked) but not impossible. It could be good enough for the big whales.
- visarga 2mo agoI would download it if I could, no question about it. And 64GB more RAM if I am at it.
- dhx 2mo agoI take it from [1] (transcript of recent DeepSeek CEO discussion with investors) that DeepSeek would disagree on the immediate catastrophic impact to the likes of OpenAI or Anthropic. The reason is even though technology parity mostly exists, only OpenAI, Anthropic et al have the inference capacity to gain market share and generate revenue. Chinese vendors don't have the chips needed to scale up inference and gain market share, and the DeepSeek CEO doesn't think this would happen in optimistic circumstances in the next 3 years, but thinks it might be possible in 5 years. In summary, regardless of country of origin, availability of inference capacity is the moat protecting the likes of OpenAI and Anthropic, not technology superiority. [1] https://www.fredgao.com/p/deepseeks-liang-wenfeng-breaks-his https://www.fredgao.com/p/deepseeks-liang-wenfeng-breaks-his
- zarzavat 2mo agoThat makes them at best temporary middlemen. It only justifies their long term valuations if they can leverage that temporary monopoly for technological superiority (they can't) or lasting market share (they can't). Chinese models prove there's no technical advantage, and the software side is heavily commoditized so there's not much advantages to market share either.
- regularfry 2mo agoThe question mark in my mind over the technological superiority is whether the additional volume of data they see due to capturing the top of the market allows them to do recursive self-improvement in a way nobody else can match, before any of the other labs can figure it out. That's the only runaway outcome I can see.
- anon373839 2mo agoYes, RSI seems to be the new AI industry McGuffin of 2026, just as agentic capability has become table stakes and scaremongering has become a punchline.
- zarzavat 2mo agoIf you have exponentially increasing use of your harness, then it's true that every day you capture exponentially more data, but it's also true that every day exponentially more data will slip through the cracks of your would-be monopoly and that data arrives at your competitors via various channels (competitor harnesses, subsidized reselling, etc) The very exponential that you are relying on to give you runaway improvement is also giving exponentially increasing data to your competitors. All else being equal your competitors stay a step behind but you never develop a monopoly either. That's the best case for Anthropic/OpenAI. In reality, training data is just one variable, exponentials don't last forever, and your competitors will get better at capturing a bigger slice of training data.
- jcfrei 2mo agoA lot of the performance of these open source models might come from distilling the closed frontier models. If those can't raise the funds anymore to train newer and better models then the whole improvement cycle might slow down.
- tjpnz 2mo agoDoes stealing from a thief still amount to theft?
- cromka 2mo agoI seriously need to start considering the scenario in which this leads to next global financial crisis.
- dgellow 2mo agoJust keep in mind that it can take a whole for things to play out. I’m someone who believe the US AI industry is completely unsustainable and built on sand, and will crash even if the current AI itself turns out to be very successful. But that doesn’t mean everything will burn to the ground next week. In a history book things will look very sudden but at normal speed that can easily take months to years to fully play out. Also, take in consideration that the AI trade infected a lot of other trade in the economy, if you decide at some point to move your money to a place that is safe in case of a downturn be sure to carefully evaluate that’s actually the case
- eru 2mo agoThese crises are manufactured by the central banks. Compare and contrast how the dot-com bust did _not_ lead to global financial crises. Nor did Black Monday, nor the recent string of bank failures in the US. ('Manufactured' above means that central banks are responsible. I make no judgement on intent here. Around 2008 it was incompetence by the Fed and ECB as far as I can tell. The Fed started paying interest on excess reserves and the ECB even increased rates. Twice. Amongst quite a few other missteps.)
- eru 2mo agoWhy is anything going to be catastrophic? Companies can go bankrupt without catastrophes for the rest of us. Happens all the time.
- Zambyte 2mo agoI read it as catastrophic for the companies trying to IPO. It'll be great for the rest of us though.
- idiotsecant 2mo agoA large portion of the economy is currently tied up in the musical chairs shell game that is AI hype. When the music stops there are going to be CEOs looking for handouts and justifying it with spooky national security buzzwords. How we respond to that will depend on whether it happens in an admin that is famously captured by the industry or not.
- cheema33 2mo ago> Why is anything going to be catastrophic? Many believe, including myself, that the market is currently propped by a massive AI bubble. Nearly a US $1 trillion is being spent this year, and more is planned for next year. All of this is for a "build up". There is no pay out. The major AI companies are taking in massive losses in the hopes that they will eventually be able to cash out. The math is not looking good to me. The effect will be like the dotcom bubble. But much much bigger. Because the numbers are so much bigger.
- eru 2mo agoWell, the dotcom bust wasn't all that bad for the wider economy. No financial crisis. A shallow recession (and even that could have been avoided.) Btw, the dotcom bust was real, but there was no dotcom bubble. Skeptics back then said that the valuations only made sense if tech companies were to dominate the economy in the future. Well, that future arrived more than a decade ago. (More formally, if you had invested in a broad index of tech companies throughout the dotcom boom years, and had held this, you would have done reasonably well over the next twenty years.)
- standeven 2mo agoThe US will just do what they did with Chinese EVs: ban the superior technology to protect US companies.
- theappsecguy 2mo agoa lot harder to ban software than hardware the size of EVs